AGENDA. THAT Council receive the 2011 Annual Investment Report. THAT expenses beyond the initial 2011 budget be ratified; and

Transcription

1 City of Brockville Finance, Administration and Operations Committee Tuesday, August 28, 2012, 4:15 pm. City Hall, Council Chambers. Committee Members Councillor D. Beatty, Chair Councillor J. Earle Councillor J. Fullarton Councillor D. LeSueur Councillor M. McFall Mayor D. Henderson, Ex-Officio Areas of Responsibility: Clerk s Office Environmental Services Finance Department Fire Department Human Resources Dept. Operations Department Airport Commission Arena Advisory Board Brockville Municipal Accessibility Advisory Committee (BMAAC) CRCA Cemetery Health Unit Joint Services Committee PLMG Police Services Board Safe Communities Coalition St. Lawrence Lodge Management Board Volunteer Awards All legal matters [excepting the purchase and sale of land]. Page AGENDA DISCLOSURE OF INTEREST STAFF REPORTS Annual Investment Report THAT Council receive the 2011 Annual Investment Report Budget and Year End Financial Statements THAT Audited Financial Statements and Treasurer's Information pertaining to the 2011 Year-End Financial Position be received (Attachment 1 to Report ); and THAT expenses beyond the initial 2011 budget be ratified; and THAT the surplus variance be transferred to the Fiscal Policy Reserve; and

2 . Finance, Administration and Operations Committee August 28, 2012 THAT the Audited Financial Statements for the Board of Management, Downtown Business Improvement Area of the Corporation of the City of Brockville be received (Attachment 2 to Report ); and THAT the Audited Statements for Corporation of the City of Brockville Trust Funds be received (Attachment 3 to Report ) City Auditor Matters to be Communicated with Members of Council THAT the Finance Administration & Operations Committee receive and review the City auditor's "Matters to be Communicated with Members of Council" for the year ended December 31, 2011 (Attachment 1 to Report ). NEW BUSINESS Nil. FAO - CONSENT AGENDA ADJOURNMENT

3 August 16, 2012 REPORT TO FINANCE ADMINISTRATION & OPERATIONS COMMITTEE August 28, D. CYR 2011 ANNUAL INVESTMENT REPORT DIRECTOR OF FINANCE FILE: Fl 2-00 D. GORDON FINANCIAL ANALYST GENERAL RECOMMENDATION THAT Council receive the 2011 Annual Investment Report. PURPOSE To provide Council with an annual Investment Report, in conjunction with the annual audited Financial Statements, as per the City of Brockville s Investment Policy. BACKGROUND Council adopted a formal Investment Policy in July 2010 as the framework for the investment of surplus funds. Section VIII of the Policy requires that an annual Investment Report be brought to Council, together with the annual audited City Financial Statements. ANALYSIS At 2011 year-end, the outstanding investments of all funds amounted to $107,456 of which the Trust Fund had $36,695 in Scotia Trust Mutual Funds and $70,761 was invested in City of Brockville debentures (Hydro Funds) as summarized below: Issued Amount $ Interest Rate Maturity Date Term By-Law % , Dec2012 7years , Dec years The City s ability to create an investment portfolio is limited due to minimal balances within the Reserve Funds and the Fiscal Policy Reserve. As well, the City is currently involved in two of the largest projects to be taken on by the City the Water Pollution Control Centre upgrade and the Aquatarium (MDC). Both of these projects have funding from the Provincial and Federal governments, but these are back-ended funding agreements which create a strain on the City s finances. Thus, with the exception of the Trust Fund s Mutual Funds, 100% of the City s investments are short-term in nature which is consistent with previous years.

4 Report # Annual Investment Report Page 2 of 3 Monies were invested for all funds (Current and Reserves; Capital; Reserve Funds including Hydro One Funds; and Trust Funds) taking into consideration cash flow requirements. This resulted in an additional $49,800 of interest revenue above what would have been earned by leaving the funds in the bank. Attachment #1 to Report illustrates the portfolio summary at year end as well as the investments made throughout the year. TREASURER S STATEMENT City Funds All investment activities for City of Brockville funds were made in accordance with the investment policies and goals adopted by the City. All investments adhered to statutory requirements and were sufficiently liquid to meet cash flow requirements while attempting to maximize the rate of return earned on available funds. A competitive process was completed for the purchase of investments with the five major Canadian banks. Due to the known short-term nature of the investments, emphasis was placed upon maximizing the rate of return rather than a diversification of the investments. Trust Funds All investment activities for Trust Funds held by the City were made in accordance with the investment policies and goals adopted by the City. All investments adhered to statutory requirements and were sufficiently liquid to meet cash flow requirements while attempting to maximize the rate of return earned on available funds. A competitive process was completed for the purchase of investments with the five major Canadian banks. The Cemetery Trust Fund has had Scotia Trust mutual fund investments for a minimum of 10 years. Even though municipal funds legislatively cannot be invested in mutual funds, with the exception of the ONE the Public Section Group of Funds, this type of investment is allowed for the Cemetery Trust monies under the Trustees Act as well as through the exemption provision in the City s Investment Policy. FINANCIAL IMPLICATIONS There are no financial implications associated with this report. POLICY IMPLICATIONS This report has been prepared to adhere to the City s Investment Policy.

5 Report # Annual Investment Report Page 3 of 3 CONCLUSION Staff has been diligent to maximize the amount of return on available monies while adhering to the City s Investment Policy. D. Gordon, Financial Analyst General D. Cyr, Director of nance B. Casse man, City Manager

6 0 0 - j INVESTMENT TRANSACTIONS INVESTMENT PORTFOLIO SUMMARY at December 31, 2011 City of BrockvNle Debentures $ Guaranteed Investment Certificates $ Mutual Funds (Trust Funds) $ $ 70,761 66% - 0% 36, % 100% Purchase Interest Redeemed Interçst Type of Security Date Rate % Term Amount $ Date Amount $ Rcvçj BNS Cashable GIC 22-Sep % 1 year 5,700, Oàt-10 2,500,000 3, Jul-il 500,000 7, Aug ,000 2, Sep-Il 2,550,000 47, ,700, BNS Short Term Non-Redeemable GIC 4-Mar % 31 days 12,000,000 3-Apr-i 1 12,000,000 16, BNS Cashable GIC BNS Short Term Non-Redeemable GIC 5-Apr-i % 1 year 8-Sep-i % 30 days 12,000,000 3,000,000 6-May-i 1 26-May-I I 6-Jun-i 1 16-Jun-il 27-Jun-il 22-Jul-il 8-Oct-i i 3,000,000 1,500,000 2, ,000 1, ,000 3, ,000,000 9, ,250,000 15, ,000,000 8, CD 0 CD 0., 5, %) co

7 August 22, 2012 REPORT TO FINANCE ADMINISTRATION & OPERATIONS COMMITTEE August 28, D. CYR 2011 BUDGET AND YEAR-END DIRECTOR OF FINANCE FINANCIAL STATEMENTS L. FERGUSON FILE: F03-05 & Fl 0-01 SUPERVISOR OF ACCOUNTING SERVICES RECOMMENDATION THAT Audited Financial Statements and Treasurer s information pertaining to the 2011 Year-End Financial Position be received [Attachment I to Report ]; and THAT expenses beyond the initial 2011 budget be ratified; and THAT the surplus variance be transferred to the Fiscal Policy Reserve; and THAT the Audited Financial Statements for the Board of Management, Downtown Business Improvement Area of the Corporation of the City of Brockville be received [Attachment 2 to Report ]; and THAT the Audited Statements for Corporation of the City of Brockville Trust Funds be received [Attachment 3 to Report ]; PURPOSE To report to Council the final audited statements for the City of Brockville, for the year ended December 31, 2011, including the audited financial statements of the Board of Management, Downtown Business Improvement Area and the City Trust Funds. BACKGROUND As outlined in the Municipal Act: Section A municipality shall, for each fiscal year, prepare annual financial statements for the municipality in accordance with generally accepted accounting principles for local governments as recommended, from time to time, by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. Section within 60 days after receiving the audited financial statements of the municipality for the previous year, the Treasurer of the municipality, (a) shall publish in a newspaper having general circulation in the municipality, a copy of the audited financial statements, the notes to the financial statements, the auditor s report and the tax rate information for the current and previous year as contained in the financial review, or, (b) a notice that a copy will be made available at no cost to the tax payer or resident upon request.

8 Report # Budget and Year-End Financial Statements Page 2 of 5 The Finance and Administration Committee monitored the budget process throughout the year by reviewing the Variance Analysis reports. The corporate-wide Variance Analysis was provided with the December 31, 2011 Interim Treasurers Report (Report ) on February 21, PSAB Requirements Beginning with the fiscal year 2009, the City of Brockville has amended the preparation and presentation of its financial statements in conjunction with the changes of PSAB regulations to reflect a full accrual basis of accounting and the reporting of the City s Tangible Capital Assets (TCA) on the Statement of Financial Position at historical cost. At the end of 2011, the City s TCAs have a net book value of approximately $101 million. Prior to 2009 all TCA were expensed in the year of purchase and were not reflected on the Statement of Financial Position but on the Consolidated Statement of Operations. Prior to 2009 the budget figures on the Consolidated Statement of Operations would be the combined total of the operating and capital budgets. Since 2009, this budget column only reflects the operating budget figures and any budgets associated with TCA would not be included in the operating budgets. Municipalities maintain many items within their capital budgets for projects which, by accounting definition, are of an operating nature rather than a true capital project. The main reason for this is an attempt to smooth the costs on the levy and thus to the tax payer. Examples of these types of expenditures are major building repairs, or maintenance to equipment that is only conducted every 3 to 5 years. Each year staff must review all capital projects and determine which costs are true TCA that will be amortized over the life of the asset and which projects are actually operating in nature and must be reflected as such on the financial statements. The Accumulated Surplus/Deficit on the Consolidated Statement of Financial Position reflects the Fund Balances (Water, Wastewater, Capital, Reserves, and Reserve Funds) which were shown in the Municipal Position section in statements prior to In accordance with the PSAB changes, the Consolidated Statement of Financial Activities no longer segregates the fund activities. ANALYSIS I FINANCIAL IMPLICATIONS Operatinci Fund The Operating fund ended the year with a surplus of $248,037 that has been transferred to the Fiscal Policy Reserve. The increase from the reported surplus on the December interim report of $155,954 is mainly attributable to the Joint Services surplus of $38,568 and the dispatch fee reconciliation that pertains to 2010 of $35,213 and 2011 additional surplus of $5,058.

9 Report # Budget and Year-End Financial Statements Page 3 of 5 Fiscal Policy Reserve As a result of the year-end surplus, the balance of the Fiscal December 31, 2011 was $405,227. Policy Reserve at Capital Fund The Capital Fund, with respect to those capital projects that have been completed and closed has been presented to Council in a separate report. The following chart illustrates the changes to the Consolidated Statement of Operations for the 2011 total Capital Expenses to attain full accrual accounting for the operating expenses. Total Consolidated Expenses-includes general, capital, water, wastewater and library $67,726,348 Less Capital Fund Expenses (26,671,639) Plus Capital Expenses that are Operating in Nature 2,294,246 Plus Amortization of TCA 2,895,449 Plus Capital Expenses through Current 69,660 Less Loss on Disposal of Assets (59,115) Consolidate Expenses-Full Accrual $46,254,949 There are minimal changes to the revenues received within the Capital Fund to report them as full accrual. The only change on the Consolidated Statement of Operations is the elimination of revenues received on the sale of a TCA, and the inclusion of a gain on the sale of a TCA. The gain on a sale of a TCA is calculated as the difference between the revenues received for the TCA and the net book value of it. The net book value is the difference of the historical cost and the accumulated amortization. For 2011 the gain on the sale of TCA is $1 9,727. Water and Wastewater Rate Administration The year-end surplus on the Water Rate Administration is higher than the projected surplus of $138,001 by $274,678 for a total surplus of $413,678. This difference is mainly attributed to the transfer of $218, 265 from the Capital Fund for projects that have closed out with a surplus and an adjustment to the contribution to Capital for water treatment plant projects that reduced the contribution by $32,300. The year-end surplus on the Wastewater Rate Administration is $420,470 over the projected deficit of $(229,860) for a net surplus of $190,610. This is mainly attributed to the transfer of $387,879 from the Capital Fund for projects that have closed out with a surplus and a reimbursement for Aird & Berlis invoices from Torbear totaling $33,612.

10 Report # Budget and Year-End Financial Statements Page 4 of 5 Tax Collections The percentage of tax levies receivable has increased from 8.83% in 2010 to 9.00% in The following chart illustrates the outstanding taxes for the City at December 31, 2011 compared to December 31, of Current Year s Taxes of Previous Year s Taxes of 2nd Year s Taxes of 3rd & Prior Years Taxes At December 31, 2011 % to Total Amount Outstanding $1,366, % 955, % 254, % 80, % $2,656, % At December 31, 2010 Amount $1,699, , ,452 24,461 $2,486,678 % to Total Outstanding 68.35% 22.52% 8.14% 0.98% % % of current Year s Levy + o/s arrears 9.00% 8.83% The slight increase can partially be attributed to the state supplemental billings happening late November. of the economy and the Accounting Practices The City s budgeting and accounting system continues to be integrated and centralized with respect to monitoring and reporting on variances, purchasing standards, fiscal accounting and financial planning. All Boards and Committees, except for the Library, use the City s process. These integrations allow for efficiencies in process as well as cost. As well, the ability to provide common standards and value of reporting on a regular basis to Council, Board Directors and Department Heads is enhanced. Representatives of the City s Auditors Bennett Lewis McMahon Stillar Chartered Accountants, will be available at the meeting to answer any questions with respect to the audit of the Financial Statements. POLICY IMPLICATIONS There are no policy implications at this time.

11 Report # Budget and Year-End Financial Statements Page 5 of 5 CONCLUSION As per the Municipal Act these reports will be made available to the public on the City website, or by hard copy if requested. D. Cyr, Director of inance 4L. Ferguson, Supervisor of Accounting 1) Services B. Casselmaanager

12 Attachment Ito Report Consolidated Financial Statements of CORPORATION OF THE CITY OF BROCKVILLE Year ended December 31, 2011 Auditors Report 1 Consolidated Statement of Financial Position 2 Consolidated Statement of Operations 3 Consolidated Statement of Change in Net Financial Liabilities 4 Consolidated Statement of Cash Flows 5 Notes to Consolidated Financial Statements 6-21

13 INDEPENDENT AUDITOR S REPORT To the Members of Council, Inhabitants and Ratepayers of the Corporation of the City of Brockville We have audited the accompanying consolidated financial statements of the Corporation of the City of Brockville, which comprise the consolidated statement of financial position as at December 31, 2011 and the consolidated statements of operations, change in net financial liabilities and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation of the City of Brockville as at December 31, 2011 and the results of its operations, change in its net financial liabilities and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Chartered Accountants, Licensed Public Accountants 2012 Brockville, Canada 1

14 CORPORATION OF THE CITY OF BROCKVILLE Consolidated Statement of Financial Position December 31, 2011, with comparative figures for 2010 Financial assets Cash and short-term investments (note 2) $ 6,207,413 $ 10,223,545 Taxes receivable 2,999,053 2,760,179 Accounts receivable 11,328,792 14,829,951 Investment in own debentures 70, ,643 20,606,019 28,017,318 Financial liabilities Accounts payable and accrued liabilities 12,133,497 12,383,097 Accrued interest on net long-term liabilities 248, ,685 Short-term credit facility (note 3) 8,500,000 6,400,000 Deferred revenues - obligatory reserve funds (note 4) 1,775,086 1,814,409 Other deferred revenues 476, ,910 Employee future benefits (note 5) 5,786,917 5,289,134 Solid waste landfill closure and post-closure liabilities (note 6) 3,520,000 3,590,000 Net long-term liabilities (note 7) 21,047,609 23,388,297 53,488,297 53,609,532 Net financial liabilities (32,882,278) (25,592,214) Non-financial assets Tangible capital assets (note 8) 101,319,872 79,966,838 Inventory of supplies 620, ,211 Prepaid expenses 437, , ,378,417 80,977,882 Subsequent event (note 9(a)) Commitments (note 9) Contingencies (notes 7(a) and 10) Accumulated surplus (note 11) $ 69,496,139 $ 55,385,668 The accompanying notes are an integral part of this consolidated financial statement. 2

15 CORPORATION OF THE CITY OF BROCKVILLE Consolidated Statement of Operations Year ended December 31, 2011, with comparative figures for 2010 Budget Actual Actual (unaudited - note 12) Revenues: Property taxation $ 29,900,031 $ 30,059,935 $ 28,598,218 Taxation from other governments 418, , ,344 User charges 11,018,499 10,977,453 10,912,987 Charges to other municipalities 1 039,050 1,262, ,659 Government grants ,951 14,574,513 20,770,522 Contributions from developers 283, , ,808 Penalties and interest on taxes 392, , ,517 Investment income 116, , ,057 Donations 48, , ,164 Gain on disposal of tangible capital assets 19,727 22,119 Recovery of expenses and miscellaneous 309,014 1,213, ,375 55,238,787 60,483,649 63,391,770 Expenses: General government 3,294,221 4,014,529 3,721,842 Protection 12,717,748 14,261,184 14,041,416 Transportation services 4,941,235 7,145,086 7,397,506 Environmental services 7,293,732 8,152,424 7,939,797 Health services 1,718,830 1,721,855 1,725,202 Social and family services 3,999,575 3,433,235 4,507,659 Social housing 934, , ,041 Recreation and cultural services 3,740,792 4,646,461 5,904,930 Planning and development 1,796,757 2,101,146 3,127,100 40,437,481 46,373,178 49,129,493 Excess of revenues over expenses $ 14,801,306 14,110,471 14,262,277 Accumulated surplus, beginning of year 55,385,668 41,123,391 Accumulated surplus, end of year $ 69,496,139 $ 55,385,668 The accompanying notes are an integral part of this consolidated financial statement. 3

16 CORPORATION OF THE CITY OF BROCKVILLE Consolidated Statement of Change in Net Financial Liabilities Year ended December 31, 2011, with comparative figures for Excess of revenues overexpenses $ 14,110,471 $ 14,262,277 Acquisition of tangible capital assets (24,307,732) (23,169,768) Amortization of tangible capital assets 2,895,450 2,685,135 Loss on disposal of roads infrastructure 59, ,461 Gain on disposal of other tangible capital assets (19,727) (22,119) Proceeds from disposal of tangible capital assets 19,860 42,341 (7,242,563) (6,097,673) Change in inventory of supplies (18,457) (31,723) Change in prepaid expenses (29,044) 314,463 Change in net financial liabilities (7,290,064) (5,814,933) Net financial liabilities, beginning of year (25,592,214) (19,777,281) Net financial liabilities, end of year $ (32,882,278) $ (25,592,214) The accompanying notes are an integral part of this consolidated financial statement. 4

17 Year ended December 31, 2011 with comparative figures for 2010 CORPORATION OF THE CITY OF BROCKVILLE Consolidated Statement of Cash Flows Operating activities: Cash provided by (used for): The accompanying notes are an integral part of this consolidated financial statement. Cash and short-term investments, beginning of year 10,223,545 17,800,260 Cash and short-term investments, end of year $ 6,207,413 $ 10,223,545 Decrease in cash and short-term investments (4,016,132) (7,576,715) Non-cash financing activities: (24,287,872) (23,127,427) Proceeds from disposal of tangible capital assets 19,860 42,341 Payments for employee future benefits (225,758) (509,642) Payments for solid waste landfill closure and post closure liabilities (203,458) (226,406) Proceeds from short-term credit financing 2,100,000 6,400,000 Decrease (increase) in accounts receivable 3,501,159 (12,353,045) Excess of revenues over expenses $ 14,110,471 $ 14262,277 (Decrease) increase in accounts payable and Decrease in accrued interest on net long-term liabilities (13,690) (16,377) Decrease in deferred revenues (45,040) (592,684) Increase in taxes receivable (238,874) (941,813) accrued liabilities (249,600) 7,085,819 Increase in inventory of supplies (18,457) (31,723) (Increase) decrease in prepaid expenses (29,044) 314,463 20,808,762 12,180, Items not involving cash: Amortization of tangible capital assets 2,895,450 2,685,135 Loss on disposal of roads infrastructure 59, ,461 Gain on disposal of other tangible capital assets (19,727) (22,119) Employee future benefits 723,541 1,579,654 Solid waste landfill closure and post-closure expenses 133, ,406 Financing activities: Principal payments on net long-term liabilities (2,207,806) (2,293,694) (537,022) 3,370,258 Capital activities: Acquisition of tangible capital assets (24,307,732) (23,169,768) Principal payments on own debentures $ 132,882 $ 31,617 5

18 Significant accounting policies are as follows: legislation of senior governments are reported as deferred revenues - committees and local boards accountable for the administration of their financial affairs Interdepartmental and inter-organizational transactions and balances between these by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. with Canadian generally accepted accounting principles for local governments as recommended The consolidated financial statements of the City are prepared by management in accordance 1. Summary of significant accounting policies: of provincial statutes such as the Municipal Act 2001, Municipal Affairs Act and related legislation. Canada, It conducts its operations under the direction of its elected Council, guided by the provisions operations of the local school boards are not reflected in these consolidated financial and resources to the municipal Council and which are owned or controlled by the City. organizations, committees and local boards are eliminated. consolidated financial statements but are reported separately. Investments are recorded at cost. determined. Government grants are recognized as revenue in the year in which the events giving rise to These consolidated financial statements reflect the assets, liabilities, revenues and statements. changes to assessed value reflecting new construction are recognized in the year they are billing adjustments made necessary by assessment appeals submitted by the ratepayers and Municipal Property Assessment Corporation ( MPAC ), an agency of the Ontario government (b) Investments: (c) Revenue recognition: The taxation, other revenues, expenses, assets and liabilities with respect to the expenses of the reporting entity. The reporting entity is comprised of all organizations, (I) Consolidated entities: (ii) Accounting for School Board transactions: (iii) Trust funds: (a) Reporting entity: Notes to Consolidated Financial Statements Year ended December 31, 2011 Trust funds and their related operations administered by the City are not included in the Property tax billings are prepared by the City based on an assessment roll prepared by and taxation revenues are recorded at the time tax billings are issued. Any supplementary the grant occur, providing the grants are authorized, any eligible criteria have been met, and The Corporation of the City of Brockville (the City ) is a municipality in the Province of Ontario, reserve CORPORATION OF THE CITY OF BROCKVILLE funds and included in revenues in the year that they are applied to qualifying expenditures. obligatory reasonable estimates of the amounts can be made. Receipts which are restricted by

19 Notes to Consolidated Financial Statements Year ended December 31, 2011 User charges, with the exception of development charges, are recognized as revenue in the Development charges, payments in lieu of parkland and funding received under public transit are recorded as deferred revenues - and gasoline tax programs are received under the authority of federal and provincial reserve funds and included in revenues in the Vacation pay is accrued for all employees as entitlement to these payments is earned in pumping of ground water and leachates from the site, and ongoing environmental monitoring, year the goods and services are provided. The City accrues its obligations under employee benefit plans as the employees render the services necessary to earn non-pension post-retirement benefits. The cost of such benefits rated on service and management s best estimate of the retirement ages of employees. Investment income earned on development charges, parkland reserve funds and other actual and expected experiences and from changes in actuarial assumptions used to determine the obligation. These gains or losses are amortized on a straight-line basis over the average remaining service period of active employees. The City also accrues its obligations for post-employment benefits when an event that site inspection and maintenance. The reported liabilities have been recognized based on Future events may result in significant changes to the estimated total expenses, capacity a change in estimates, when applicable. (e) Employee future benefits: accordance with the City s benefit plan for vacation. earned by the employees is actuarially determined using the projected benefit method pro management. In the years between valuations, an extrapolation is used to compute the expected accrued benefits obligation and related expenditures. management s best estimate of future expenses, long-term inflation rates and discount rates. used or total capacity and the estimated liabilities, and would be recognized prospectively, as obligates the City occurs such as parental and short-term sick leaves. The City accrues landfill closure costs including final covering and landscaping of the site, in the year that they are applied to qualifying capital expenditures. Other investment income is reported in revenues in the period earned. (f) Solid waste landfill closure and post-closure liabilities: obligatory reserve funds is recorded as deferred revenue and included in municipal revenues Actuarial valuations are prepared every three years, or more often at the discretion of Actuarial gains or losses on the accrued benefit obligation arise from the difference between (c) Revenue recognition (continued): (d) Vacation pay: 1. Summary of significant accounting policies (continued) CORPORATION OF THE CITY OF BROCKVILLE year that they are applied to qualifying capital expenditures. obligatory legislation and the use of these funds is restricted to applicable capital expenditures. They

20 Land improvements years Buildings 5 years years public display areas. These assets are not recorded as tangible capital assets. assets including buildings, artifacts, paintings and sculptures located at City sites and (i) Tangible capital assets are recorded at cost (or estimated cost when historical cost replacement cost. Asset Useful life on a straight-line basis over their estimated useful lives as follows: 1. Summary of significant accounting policies (continued) (h) Tangible capital assets: Notes to Consolidated Financial Statements Inventories of supplies are held for consumption and are stated at the lower of cost and acquisition, construction, development or betterment of the asset. Machinery, furniture and equipment 3 Vehicles 6 years Year ended December 31, 2011 records are not available) which includes amounts that are directly attributable to the General capital: The cost, less residual value, of the tangible capital assets, excluding land, are amortized Plants and facilities years construction are not amortized until the asset is put into service. related to the asset, the tangible capital asset is recognized at a nominal value. Interest is capitalized whenever external debt is issued to finance the construction of (iv) Capitalized interest: Amortization is charged from the date of acquisition to the date of disposal. Assets under years years Roads 20 Water and wastewater 50 Where an estimate of fair value can not be made or where there is no future benefit date of receipt and also are recorded as revenue. (iii) Contributions of tangible capital assets: (ii) Tangible capital assets disclosed at nominal values: Infrastructure: Tangible capital assets received as contributions are recorded at their fair value at the tangible capital assets. The City manages and controls various works of art and non-operational historical cultural (v) Works of art and historical treasures: CORPORATION OF THE CITY OF BROCKVILLE (g) Inventories of supplies: years

21 CORPORATION OF THE CITY OF BROCKVILLE Notes to Consolidated Financial Statements Year ended December 31, Summary of significant accounting policies (continued) (i) Use of estimates: The preparation of financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include amortization of tangible capital assets and employee future benefits and solid waste landfill closure and post-closure liabilities. Actual results could differ from these estimates. 2. Cash and short-term investments: The City invests its cash with one or more Canadian Schedule I banks. 3. Short-term credit facility: The City has obtained short-term credit facilities from the Ontario Infrastructure Land Corporation (OILC) as bridge financing for the Water Pollution Control Centre Upgrade and construction of the Aquatarium facility (see note 9(b)). Advances bear interest at a floating rate per annum based on OILC s cost of funds plus OILC s prevailing spread assigned to the municipal sector with an effective rate during 2011 of 1.55% (2010 of 1.54%). The advances are repayable in full on the earlier of the date debenture financing is obtained for the projects or the facility termination date. Advances on facility Water Pollution Facility Control Centre Aquatarium termination Credit Facility Upgrade facility date $ 6,400,000 $ 6,400,000 $ October 13, 2015 $2,600,000 $ 1,600, ,000 November 10, 2016 $ 9,000,000 $ 8,000,000 $ 500, Deferred revenues obligatory reserve funds: Public sector accounting standards require that obligatory reserve funds are reported as deferred revenues as provincial legislation or agreements restrict how these funds may be used. The balances in the obligatory reserve funds of the City are summarized as follows: Development charges $ 193,244 $ 394,007 Parkland 4,478 4, , ,480 Provincial gasoline tax 21,698 99,564 Federal gasoline tax 1,555,666 1,316,365 1,577,364 1,415,929 $ 1,775,086 $ 1,814,409

22 Information about the City s post-retirement benefit plans is as follows: Benefit payments (142,208) (134,562) Actuarial loss 600,046 Actuarial gains and losses are being amortized over a 12 year period An actuarial valuation was prepared as at December 31, 2009 and extrapolated forward to (a) The City has defined benefit plans providing post-retirement medical (until age 65) and life $ 5,786,917 $ 5,289,134 Unused sick leave (note 5(b)) 783, ,459 Post-retirement medical and life insurance (note 5(a)) $ 3,616,547 $ 3,468,887 insurance benefits covering substantially all retirees and employees. estimate the obligations as at December 31, The significant actuarial assumptions adopted in measuring the City s accrued post-retirement benefits liability are as follows: The assumed medical cost trend rate at December 31, 2011 was 7.7% decreasing to 5.0% by Discount rate 3.5% 4.5% 5. Employee future benefits: Notes to Consolidated Financial Statements Year ended December 31, ( % decreasing to 5.0% by 2030). Workplace Safety and Insurance Board costs (note 5(c)) 1 387,1 87 1,179,788 Rate of compensation increase 3.0% 3.0% Interest on accrued benefits 163, ,621 Accrued benefits obligation, beginning of year $ 3,546,576 $ 3,366,183 Current service cost 166, ,334 Accrued benefits obligation, end of year 4,334,682 3,546,576 Unamortized actuarial losses 718,135 77,689 Accrued liability, end of year $ 3,616,547 $ 3,468,887 CORPORATION OF THE CITY OF BROCKVILLE

23 $ 3,520,000 $ 3,590, complete certain closure procedures and to conduct post-closure procedures. post-closure costs, discounted using an average long-term borrowing rate of 4.0% and an annual post-closure care are $5,280,000, of which $1 760,000 will be recognized in future years. Significant actuarial assumptions adopted in measuring the City s accrued benefits under this plan are similar to those listed in (a) above. Information about the City s sick leave benefit plans is as follows: Benefit payments (1 1,452) (2,862) cash payment when they leave the City s employment. (b) Some employees of the City can accumulate unused sick leave and may become entitled to a 5. Employee future benefits (continued): 6. Solid waste landfill closure and post-closure liabilities: WSIB administers the claims and bills accident costs plus an administration fee to the City. is responsible for the cost of employee accident claims that arose during that period. The Board (WSIB ) during the period from February 2003 to February As a result, the City (c) The City was a Schedule 2 employer with respect to the Workplace Safety and Insurance inflation rate of 2.0%. The estimated undiscounted future cash flows associated with closure and care will involve surface water and ground water monitoring and venting gas. Notes to Consolidated Financial Statements Year ended December 31, 2011 Accrued benefits obligation, beginning of year $ 640,459 $ 653,262 Current service cost, interest on accrued benefits and actuarial losses (gain) 154,176 (9,941) Accrued benefits obligation, end of year $ 783,183 $ 640,459 The Workplace Safety and Insurance Board has estimated future benefits costs related to workplace injuries to be $1,387,187 (2010 -$1,179,788). The City ceased to operate its solid waste landfill site on December 31, 2000, but is required to The main components of the closure plan are final capping and landscaping. The post-closure The recorded liabilities are the present value of future cash flows associated with the closure and Estimated costs to complete closure $ 320,000 $ 320,000 Recorded post-closure costs 3,200,000 3,270,000 CORPORATiON OF THE CITY OF BROCKVILLE

24 CORPORATION OF THE CITY OF BROCKVILLE Notes to Consolidated Financial Statements Year ended December 31, Net long-term liabilities: (a) The net long-term liabilities reported on the Consolidated Statement of Financial Position represent debentures issued by the City and are made up of the following: Total long-term liabilities incurred by the City $ 31,157,176 $ 34,001,783 Less amounts assumed by other municipalities with respect to St. Lawrence Lodge (10,109,567) (10,613,486) $ 21047,609 $ 23,388,297 Included in total long-term liabilities are global debentures totaling $25,439,274 ( $26,707,314) issued during 2004 and 2005 with respect to St. Lawrence Lodge. They include direct obligations of the City in respect of the principal amount and also include distinct joint and several obligations of the Corporation of the City of Brockville and each of the United Counties of Leeds and Grenville, the Town of Prescott and the Town of Gananoque (participating municipalities ). (b) The joint and several obligations of the three municipalities amount to $10,109,567 ( $10,613,486). As the participating municipalities have assumed responsibility for repayment of these obligations, they have been deducted from the City s net-long term liabilities. The City is contingently liable for the long-term liabilities assumed by the participating municipalities. Principal is due on net long-term liabilities as follows: 2012 $ 2,035, ,130, ,186, ,544, ,490,863 Thereafter 11,660,142 (c) $ 21,047,609 Interest rates on the long-term liabilities range from 2.69% to 6.25% (4.71% to 5.606% on the global debentures with respect to St. Lawrence Lodge) payable semi-annually. Interest on long-term liabilities amounted to $1,092,040 (2010 -$1,205,378). (d) The annual principal and interest payments required to service these liabilities are within the annual debt repayment limit prescribed by the Ministry of Municipal Affairs and Housing.

25 9,221 CORPORATION OF THE CITY OF BROCKVILLE Notes to Consolidated Financial Statements Year ended December 31, Tangible capital assets: Balance Additions Balance December 31, (net of December 31 Cost 2010 transfers) Disposals ,104 General Capital: Land $ 4, $ 725,988 $ $ 5, ,969,589 Land improvements Buildings 13, ,588 Machinery, furniture and equipment 7,473,512 2,385, ,952 9,677,421 Vehicles 5,216, , ,081 5,364,927 Infrastructure: Plants and facilities 10,525,163 10,525,163 Roads 44773, , ,805 44,715,244 Water and waste water 22,792, , ,319,720 42,825,192 Assets under construction 23,427,509 19,397,683 Total $ 135,576,644 $ 24,307,732 $ 1,220,662 $ 158,663,714 Balance Balance Accumulated December 31, December 31, amortization 2010 Additions Disposals ,374,294 General Capital: Land improvements $ 2,013,105 $ 66,273 $ $ 2,079,378 Buildings 8,886, ,935,273 Machineryfurnitureandequipment 4,282, , ,952 4,624,300 Vehicles 3, , ,896 3,559,982 Infrastructure: Plants and facilities 9,165, ,529 Roads 21,595,393 1,013, ,157 22,017,697 Waterandwastewater 6,139, ,854 5,409 6,466,918 Total $ 55,609,806 $ 2,895,450 $ 1,161,414 $ 57,343,842 Net book value Net book value December 31, 2010 December31, 2011 General Capital: Land $ 4,644,366 $ 5,370,354 Land improvements 956, ,21 1 Buildings 4,867,178 4,674,831 Machinery, furniture and equipment 3,190,594 5,053,121 Vehicles 1 689, ,945 Infrastructure: Plants and facilities 1,359,398 1,1 50,869 Roads 23,178,346 22,697,547 Water and waste water 16,653,293 16,852,802 Assets under construction 23,427, ,192 Total $ 79, $ 101,319,872

26 of $22,997,500 and $7,669,200 from the provincial government have been approved. The of expenses in the year that a settlement is reached. Broad Street in the amount of $ $1 070,000 for parking facilities. City has agreed to contribute $1.5 million towards the construction of the Aquatarium and costs are estimated to be $18 million and an additional $2.2 million for parking facilities. The called the Aquatarium (previously to be called Maritime Discovery Centre). The total project to The annual cost of this contract is estimated at $908,000. (a) Subsequent to the year end the City entered into a 10 year contract for waste removal through 9. Commitments: Notes to Consolidated Financial Statements Year ended December 31, 2011 The total project costs incurred as at December 31, 2011 were $3,835,000 on the Aquatarium and $726,000 on additional parking facilities. The City has also committed to complete additional capital infrastructure improvements on a total cost of approximately $46 million. Grants from the Federal government in the amount Provisions have been made where it is probable that liabilities will be incurred and where such Contribution from Hydro One reserve fund 6,323,333 resolution of the appeal results in a settlement, the difference will be reflected as a reduction liabilities can be reasonably estimated. billed and a reduction of the liability for future WSIB costs. To the extent that the eventual 10. Contingencies: at any time. Management is of the opinion that the City has valid defenses and appropriate activities and is subject to environmental laws and regulation with respect to these properties. In addition, the City owns various properties that have previously been used in commercial (a) The nature of the City s activities is such that there is usually litigation pending or in prospect expected to be completed by September insurance coverage in place for claims for damages and related costs. Estimated Debenture issue $ 8,000,000 Development charges 1,154,999 Insurance Board (note 5(c)) and has estimated a recovery of $250,000 of amounts previously The total costs incurred as at December 31, 2011 were $40,059,370. The upgrade is Further costs, if any, that may arise will be accounted for in the year that they are identified. CORPORATION OF THE CITY OF BROCKVILLE (b) The City has entered into a partnership agreement to construct a destination tourist site to be (c) The City has entered into a contract for the upgrade to the Water Pollution Control Centre for City is financing its 1/3 share of the costs as follows: (b) The City has appealed certain expenses that have been paid to the Workplace Safety and

27 The accumulated surplus consists of: Investment in tangible capital assets 101,319,872 79,966,838 Funds available for acquisition of capital assets: Projects in progress 2,159,775 2,766,607 Completed projects 40,522 40,522 $ Accumulated surplus: Notes to Consolidated Financial Statements Year ended December31, 2011 Taxation and user fees (569,087) (267,428) Unfunded costs: Employee future benefits (note 10(b)) (5,786,917) (5,289,134) Accrued interest on long-term liabilities (248,995) (262,685) (30,603,521) (32,530,116) The unaudited budgeted expenses presented in the consolidated statement of operations do not and facility maintenance projects that are included in the annual capital fund budget. Acquisition of capital assets to be recovered from: 12. Budget: Net long-term liabilities (21,047,609) (23,388,297) include amortization of tangible capital assets, adjustments to employee future benefits liabilities Waste water treatment system 1,609,285 1,221,407 Reserves and reserve funds (note 13): CORPORATION OF THE CITY OF BROCKVILLE Landfill liabilities (3,520,000) (3,590,000) $ 69,496,139 $ 55,385,668 (8,238,415) 1,304,613 Issue of long-term liabilities (9,869,625) (1,235,088) 2,586,146 3,359,052 Reserve funds 1,640,329 2,476,600 Other reserves 540, ,452 for 2011 operating surplus) 405,226 Fiscal policy reserve (after increase of $248,037 4,432,057 3,285,281 Library board 70,855 61,257 Water treatment and distribution system 2,751,917 2,330,234 Operating surplus (deficit): Operations of the City $ (327,617)

28 CORPORATION OF THE CITY OF BROCKVILLE Notes to Consolidated Financial Statements Year ended December 31, Reserves and reserve funds: Reserves and reserve funds consist of: Reserves: Working capital $ 430,373 $ 430,373 Fiscal policy (to reduce future taxation) 405,226 Projects deferred to the following year 110, , , ,452 Reserve funds: Landfill site 21, ,333 Specific reserve funds for acquisition of capital assets 678, ,971 Specific reserve funds to provide for future operating expenses 733, ,188 Parking facilities 189, ,062 Hydro One proceeds management 16, ,046 1,640,329 2,476,600 $ 2,586,146 $ 3,359, Pension agreement: Substantially all of the employees of the City are members of the Ontario Municipal Employees Retirement Fund (OMERS), which is a multi-employer defined benefit pension plan. The plan specifies the amount of the retirement benefit to be received by the employees based on length of service and rates of pay. Contributions to the plan made during the year by the City on behalf of its employees amounted to $1,539,756 ( $1,226,395) and are included as expenses in the consolidated statement of operations. The most recent actuarial valuation was at December 31, 2011 and the December 31, 2011 financial statements of OMERS report net assets of $57 billion and an actuarial funding deficit of $7,290 million. 15. Trust funds: Trust funds administered by the City amounting to $1,188,638 (2010 -$1,261,404) have not been included in the consolidated statement of financial position and their financial activities have not been included in the consolidated statement of operations.

29 Paul Ladoucer Craig Mason Andrew Harvie D. Thomas Fournier Lee MacArthur Conal Cosgrove Robert Casselman Christopher Dwyre Scott Fraser Shawn Borgford Robert Ferguson Mark Noonan Harry Jones Douglas Locke Donna Cyr Paul Smith Todd Bertrend Michael Grant David Jeggo Robin Ashton Adrian Geraghty Royal Metcalfe Edmund Stone Maureen Pascoe-Merkley Travis Cauley Randy Burke Renny Rayner Greg Healy Mark Heffernan Greg Watt Darryl Boyd Keith Fleury Alan Ranger Name Peter Buell Peter Jonker Peter Raabe John Inglis John Paul Graham Coe Deputy Fire Chief Investigator 1 Sergeant Sergeant Sergeant Police Sergeant Police Investigator 1 Police Investigator 1 Police Chief Police Sergeant Fire Captain Fire Captain Fire Captain Fire Captain Fire Captain Fire Captain Fire Chief Fire Captain Inspector City Manager Position $150,407 $141,842 $131,714 $130,016 $123,034 $121,408 $117,549 $115,835 $115,498 $113,239 $112,720 $112,575 $111,550 $111,519 $111,343 $110,788 $110,708 $110,688 $110,653 $110,277 $110,150 $110,072 $108,864 $107,869 $107,338 $106,257 $105,795 $105,137 $101,028 $100,102 $108,651 $105,861 $1,284 $1,148 $1,114 Salary Benefits Taxable Notes to Consolidated Financial Statements Year ended December 31, 2011 position, salary and taxable benefits of employees with annual salaries of $100,000 or more. Under the Public Sector Salary Disclosure Act, 1996 the City is required to disclose the name, 16. Public sector salary disclosure: CORPORATION OF THE CITY OF BROCKVILLE 1st Class Constable 1st Class Constable Fire Captain Fire Prevention Officer Chief Fire Prevention Officer 15t Class Constable 15t Class Constable Director, Planning Director, Environmental Services Fire Captain 1St Class Police Constable Director, Finance Staff Sergeant 1St Class Police Constable 1St Class Police Constable Director, Operations Division Operations Deputy Police Chief Police Investigator 1 Detective Sergeant $ 109,598 $ 107,549 $ 124,350 $ 123,871 $ 122,105 $ 104,681 $ 102,685 For 2011 the employees who met the requirements for disclosure were as follows: $ 577 $ 821 $ 927 $ 703 $ 803 $ 821 $ 745 $ 783 $ 889 $ 783 $ 677 $ 846 $ 803 $ 464 $ 804 $ 720 $ 821 $ 783 $ 677 $ 783 $ 694 $ 736 $ 763 $ 872 $ 846 $ 846 $ 986 $ 961 $ 783 $ 783 $ 791 $ 944 $ 846 $ 803 $ 703 $ 991

30 17. Expenses by object: Materials and supplies 7,335,315 6,896,046 Certain comparative figures have been restated to conform with the financial statement PS 1201 Financial Statement Presentation PS 2601 Foreign Currency PS 3041 Portfolio Investments PS 3450 Financial Instruments standards for public reporting entities which are required to be adopted by the City by 2016: During 2011 the Canadian Accounting Standards Board issued the following new accounting 18. Comparative figures: 19. Future accounting changes: $ 46,373,178 $ 49,129,493 Amortization of tangible capital assets 2,895,450 2,685,136 Notes to Consolidated Financial Statements Year ended December 31, 2011 The following is a summary of the expenses by object: Interest on long-term liabilities 1,092,040 1,201,804 Loss on disposal of roads infrastructure 59, ,461 Salaries, wages and benefits $ 23,920,575 $ 23,606,808 Contracted services 5,786,560 8,433,604 Rents and financial 39,970 52,444 Transfer payments 5,244,154 6,149,190 presentation adopted for the current year. CORPORATION OF THE CITY OF BROCKVILLE

31 CORPORATION OF THE CITY OF BROCKVILLE Notes to Consolidated Financial Statements Year ended December 31, Segmented information: Segmented information has been provided in accordance with the functional lines of service that are presented in the consolidated statement of operations. The activities that are included in each functional line of services are as follows: General government consists of the Mayor and Council, the City Manager and administrative services which include the Clerk, Finance, Human Resources and Information Technology departments. Protection consists of Fire, Police and By-law Enforcement departments as well as contributions to the Cataraqui Region Conservation Authority. Transportation services include engineering, road and sidewalk construction and maintenance, winter control, traffic operations and parking. Environmental services included the operations of waterworks, sanitary and storm sewers, wastewater treatment, solid waste disposal and recycling. Health services consists of cemetery management and maintenance and transfers to the local Health Unit. Social and family services consists of transfers to the United Counties of Leeds and Grenville for social and family services, transfers to St Lawrence Lodge and interest on net long-term liabilities with respect to St Lawrence Lodge. Social housing consists of transfers to the United Counties of Leeds and Grenville. Recreational and cultural services is comprised primarily of parks services and the operation of recreational facilities, the library and the museum. Planning and development is comprised of planning and zoning, and economic development.

32 Recreational and Planning General Transportation Environmental Health Social Cultural and 2011 Government Protection Services Services Services Services Services Development Total 12, , ,321 6, ,862 54,248 18,792 $ 1,454,092 $ 345,420 2, ,835 38,088 1,064, ,456 21,355 $ 4,014,529 $14,261,184 $7,145,086 $8,152,424 $ 1,721,855 $4,330,493 $4,646,461 $2,101,146 $46,373, ,180 $ 20 CORPORATION OF THE CITY OF BROCKVILLE Notes to Consolidated Financial Statements Year ended December 31, Segmented information (continued): Revenues: Property taxation $ 29,790,351 $ $ $ $ Taxation from other governments 354,483 34,903 4,354 User charges 180,771 1,111, ,233 6,923, ,258 1,530, ,509 10,977,453 Charges to other municipalities 29, , ,967 1,262,542 Government grants 2,344, ,130 1,305,718 10,202, ,599 14,574,513 Contributions from developers 110, ,241 Penalties and interest on taxes 474, , ,527 lnvestmentincome 157,374 1,361 Donations 284,190 31, ,388 5, ,768 Gain on disposal of tangible capital assets 7,152 7,000 2,000 19,727 Recovery of expenditures and miscellaneous 496, ,413 67,362 92,366 53, ,703 1,213,400 $ 34,112,488 $ 2,309,426 $ 2,742,456 $ 17,561,166 $ 185,233 $ 507,967 $ 2,270,538 $ 794,385 $ 60,483,649 Expenses: Wages and benefits $ 1,823,010 $12,305,652 $ 2,633,099 $ 3,617,500 $ 194,068 $ $ 2,291,741 $ 1,055,505 $ 23,920,575 Interest on long-term liabilities 156, ,515 8,053 Materials and supplies 1,400,778 1,040,090 1,174,296 2,191,636 50, ,239 7,335,315 Contracted services 594, ,090 1,729,515 1,534,510 13, ,673 5,786,560 Rentandfinancialservices 2, ,616 11, ,970 Transferpayments 4, ,618 3,562,658 65,792 Amortization 188, ,817 1,397, ,515 10,067 Loss on disposal of roads infrastructure 52,

33 Recreational and Planning General Transportation Environmental Health Social Cultural and 2010 Government Protection Services Services Services Services Services Development Total 14,905 $ 830 $ 3,721,842 $14,041,416 $ 7,397,506 $ 7,939,797 $ 1,725,202 $ 5,271,700 $ 5,904,930 $ 3,127,100 $ 49,129,493 $ 1,139, , CORPORATION OF THE CITY OF BROCKVILLE Notes to Consolidated Financial Statements Year ended December 31, Segmented information (continued): Revenues: Propertytaxation $28,341,884 $ $ $ $ $ Taxation from other governments 349,744 40,728 4,967 Usercharges 228,817 1,158, ,196 6,709, ,324 1,734, ,845 10,912,987 Charges to other municipalities 46, , , ,659 Government grants 878, ,019 2,709,078 14,733,699 1,128,099 1,147,593 20,770,522 Contributions from developers 145,808 Penalties and interest ontaxes 369,406 50,111 lnvestmentincome 112,980 12, ,057 Donations 2, ,436 87, ,164 Gain on sale of tangible 22,119 capital assets (575) 28,470 (964) (5,112) 300 Recovery of expenditures and miscellaneous 213,358 61,762 54,397 6,052 42, , , ,375 $ 30,540,983 $ 1,632,674 $ 3,548,046 $ 21,823,718 $ 195,424 $ 509,915 $ 3,128,382 $ 2,012,628 $ 63,391,770 Expenses: Wages and benefits $ 1,812,118 $12,388,334 $ 2,375,445 $ 3,421,365 $ 198,679 $ 2,384,829 $ 1,026,038 $ 23,606,808 Interest on long-term 1,201,804 liabilities 31, , , ,507 8,977 Materials and supplies 1,232, ,072 1,092,648 2,103,558 48, ,608 6,896,046 Contracted services 527, ,389,828 1,550,405 23, , ,680 8,433,604 Rentandfinancialservices 1, ,875 26,185 20, ,444 6,149,190 Transferpayments 4, ,679 1,443,155 4,467,193 98,009 Amortization 143, ,684 1,292, ,452 11,936 Loss on disposal of roads infrastructure 52,237 52,224

34 Year ended December 31, 2011 THE BOARD OF MANAGEMENT, IMPROVEMENT AREA OF THE DOWNTOWN BUSINESS BROCKVILLE CORPORATION OF THE CITY OF Financial Statements of Attachment 2 to Report

35 for our audit opinion. Brockville, Canada statement of financial position as at December 31, 2011 and the statements of operations and cash accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free Auditor s Responsibility standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Management s Responsibility for the Financial Statements flows for the year then ended, and a summary of significant accounting policies and other explanatory Business Improvement Area of the Corporation of the City of Brockville, which comprise the are appropriate in the circumstances, but not for the purpose of expressing an opinion on the from material misstatement, whether due to fraud or error. Management is responsible for the preparation and fair presentation of these financial statements in conducted our audit in accordance with Canadian generally accepted auditing standards. Those effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of December 31, 2011 and the results of its operations and its cash flows for the year then ended in preparation and fair presentation of the financial statements in order to design audit procedures that Chartered Accountants, Licensed Public Accountants Opinion accordance with Canadian public sector accounting standards. accounting policies used and the reasonableness of accounting estimates made by management, as the Downtown Business Improvement Area of the Corporation of the City of Brockville as at In our opinion, the financial statements present fairly, in all material respects, the financial position of well as evaluating the overall presentation of the financial statements. assessment of the risks of material misstatement of the financial statements, whether due to fraud or in the financial statements. The procedures selected depend on the auditor s judgment, including the An audit involves performing procedures to obtain audit evidence about the amounts and disclosures We have audited the accompanying financial statements of the Board of Management, Downtown We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis Downtown Business Improvement Area of the Corporation of the City of Brockville information. Our responsibility is to express an opinion on these financial statements based on our audit. We error. In making those risk assessments, the auditor considers internal control relevant to the entity s To the Board Members, Members of Council and Ratepayers INDEPENDENT AUDITOR S REPORT

36 Year ended December 31, 201 1, with comparative figures for 2010 Budget 2010 (unaudited) Actual December 31, 2011 with comparative figures for 2010 Cash $ 22,580 $ 12,154 Receivable from City of Brockville 18,555 10,005 Interest Taxation $ 228,482 $ 230,554 $ 219,565 Accumulated surplus, beginning of year 22,159 12,054 Accumulated surplus, end of year $ 41,1 35 $ 22,159 The accompanying notes are an integral part of these financial statements. Parking levy 39,029 39,029 36,769 Materials, supplies and services 145, , , , , , , , ,434 Net financial assets, being accumulated surplus (note 2) $ 41,135 $ 22,159 Financial assets Statement of Financial Position Statement of Operations Revenues: Expenses: Salaries and benefits 72,053 72,379 70,115 Transfer to City of Brockville 45,029 51,029 43,170 Excess of revenues over expenses 5,403 18,976 10,105 CORPORATION OF THE CITY OF BROCKVILLE BUSINESS IMPROVEMENT AREA OF THE THE BOARD OF MANAGEMENT, DOWNTOWN

37 Statement of Cash Flows Excess of revenues over expenditures $ 18,976 $ 10,105 Cash provided by (used for): Change in non-cash operating working capital: Increase in receivable from City of Brockville (8,550) (5,866) Increase in cash 10,426 4,239 Cash, beginning of year 12,154 7,915 Cash, end of year $ 22,580 $ 12,154 The accompanying notes are an integral part of these financial statements Year ended December 31, 2011, with comparative figures for 2010 Operating activities: BUSINESS IMPROVEMENT AREA OF THE CORPORATiON OF THE CiTY OF BROCKVILLE THE BOARD OF MANAGEMENT, DOWNTOWN

38 governments as recommended by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. Significant aspects of the accounting policies adopted by the Board are determined. Government grants are recognized as revenue in the year in which the events giving rise to management in accordance with Canadian generally accepted accounting principles for local of the City of Brockville. The Board s consolidated financial statements have been prepared by 1. Basis of presentation and accounting: Notes to Financial Statements Year ended December 31, 2011 The Board of Management, Downtown Business Improvement Area is a Board of the Corporation Property tax billings are prepared by the City based on an assessment roll prepared by and taxation revenues are recorded at the time tax billings are issued. Any supplementary the grant occur providing the grants are authorized, all eligible criteria have been met and The accumulated surplus consists of a reserve fund that was established by the Corporation of the City of Brockville on behalf of the Board. User charges and fees are recognized as revenue in the year the services are provided. Park Outdoor Skating Park funded from the Fiscal Policy Reserve. The annual amount to be repaid is as follows: The Board has a commitment to repay the City of Brockville for capital expenditures for the Hardy 2012 $ 6, , Commitment: 2. Accumulated surplus: billing adjustment made necessary by assessment appeals submitted by the ratepayers and (b) Revenue recognition: reserve funds. (a) Fund accounting: Municipal Property Assessment Corporation (MPAC ), an agency of the Ontario government as follows: These statements reflect the assets, liabilities, revenue and expenditures of the operating and reasonable estimates can be made. changes to assessed value reflecting new construction will be recognized in the year they are BUSINESS IMPROVEMENT AREA OF THE CORPORATION OF THE CITY OF BROCKVILLE THE BOARD OF MANAGEMENT, DOWNTOWN $ 12,000

39 Attachment 3 to Report Financial Statements of CORPORATION OF THE CITY OF BROCKVILLE TRUST FUNDS Year ended December 31, 2011

40 INDEPENDENT AUDITOR S REPORT To the Members of Council, Inhabitants and Ratepayers Corporation of the City of Brockville We have audited the accompanying financial statements of the trust funds of the Corporation of the City of Brockville, which comprise the statement of financial position as at December 31, 2011 and the statement of continuity of trust funds for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the funds held in trust by the Corporation of the City of Brockville as at December 31, 2011 and the changes in its net financial liabilities and cash flows for the year then ended in accordance with Canadian public sector accounting standards. Chartered Accountants, Licensed Public Accountants Brockville, Canada

41 Change in net financial assets 25, ,299 2,470 31,064 62,232 5,300 $ Year ended December31, 2011, with comparative figures for 2010 Statement of Changes in Net Financial Assets Cemeteries Lodge Netfinancial assets $ 908,902 $1,892 $ 76,087 $ 171,722 $1,158,593 $1,127,529 $1,882 $76,087 Statement of Financial Position $171,722 Capital 57,073 Brockville 1,382 Perpetual C. Deferred Partners Care Babcock Interments Trust Total Total $1,100,138 $1,158, ,859 58,455 $1,074,012 53,517 $1,127,529 St. Lawrence December 31, 2011, with comparative figures for 2010 TRUST FUNDS CORPORATION OF THE CITY OF BROCKVILLE The accompanying notes are an integral part of these financial statements. Balance, end of year $ 908,902 $ 1,882 $ 76,087 $ 171,722 $1,158,593 $1,127,529 Balance, beginning of year 883,629 1,860 72, ,252 1,127,529 1,065,297 Expenditures 7, , , ,105 32, , , , ,337 lnvestmentincome 11, ,470 15,365 15,207 Partners contributions Capital receipts $ 20,357 $ 336, ,277 $ $ 336,277 2,887 25,657 $ 51,853 Perpetual C. Deferred Partners Care Babcock Interments Trust Total Total Cemeteries Lodge St. Lawrence Accumulated income Trust balances $ 851,829 $ 908,902 $ 500 $ 76,087 $ 171,722 Payable to City of Brockville 30, ,875 Financial liabilities 938,947 1,882 76, ,722 1,188,638 1,261, , ,115 Receivable from City of Investments 36,695 36,695 30,045 Cash $ 902,252 $1,882 $ 76,087 $ 31,607 $1,011,828 $ 421,545 Financial assets

42 The accompanying notes are an integral part of these financial statements. Cash, end of year $1,011,828 $ 421,545 Year ended December 31, 2011, with comparative figures for Cash, beginning of year 421, ,573 Increase in cash 590, ,972 Decrease (increase) in investments 803,164 (2,657) (212,881) 232,629 Investing activities: Change in non-cash operating working capital: (Increase) decrease in receivable from City of Brockville (140,115) 56,046 (Decrease) increase in payable to City of Brockville (103,830) 114,351 Change in net financial assets $ 31,064 $ 62,232 Operating activities: Cash provided by (used for): Statement of Cash Flows TRUST FUNDS CORPORATION OF THE CITY OF BROCKVILLE

43 Accounting Board of the Canadian Institute of Chartered Accountants. Significant accounting policies are as follows: Effective January 1, 2011 the City of Brockville retrospectively adopted Canadian public sector not result in any changes to the amounts previously reported. 2. Investments: 3. Trust balances: 4. Adoption of new accounting standards: Investments are stated at their fair market value. (a) capital receipts are reported on the cash basis of accounting. accepted accounting principles for local governments as recommended by the Public Sector 1. Summary of significant accounting policies: (b) expenditures and investment income are reported on the accrual basis of accounting. Notes to Financial Statements Year ended December 31, 2011 The trust fund statements are prepared by management in accordance with Canadian generally The accumulated incomes of the cemetery funds are available to offset cemetery operating costs. accounting standards for its trust funds. The adoption of public sector accounting standards did TRUST FUNDS CORPORATION OF THE CITY OF BROCKVILLE

44 AUGUST 22, 2012 REPORT TO FINANCE ADMINISTRATION & OPERATIONS COMMITTEE - AUGUST 28, CITY AUDITOR S MATTERS TO BE COMMUNICATED WITH MEMBERS OF COUNCIL D. CYR DIRECTOR OF FINANCE FILE: F03-06 RECOMMENDED THAT the Finance Administration & Operations Committee receive and review the City Auditor s Matters to be Communicated with Members of Council for the year ended December 31, 2011 [Attachment I to Report # ]. PURPOSE To file the City Auditor s Matters to be Communicated with Members of Council for the year ended December 31, 2011 to the Finance and Administration Committee in conjunction with auditing requirements. BACKGROUND This report, which was presented in prior years as the Audit Findings Report, is required by generally accepted auditing standards to be filed directly by all Auditors to those designated by Council for having the responsibility for oversight on financial matters. The scope and purpose is contained in the Auditor s Report. CONCLUSION Mr. Alvin Bennett, representative of Bennett Lewis McMahon Stillar, will be available at the meeting to answer any questions with respect to the Matters to be Communicated with Members of Council. C D. Cyr B. Casselman Director of Finance City Manager

45 Attachment 1 to King Street East Telephone (613) Bennett P0 Box 459 Stn Main Telefax (613) Lewis Brockvijle ON K6V 5V6 McMahon Stillar Chartered Accountants Corporation of the City of Brockville Matters to be Communicated with Members of Council Year ended December 31, 2011 Bennett Lewis McMahon Stillar Page 1

46 PURPOSE OF THE REPORT This report is presented in order to promote effective communication between ourselves and members of Council, to address matters that are required to be communicated and to assist members of Council in carrying out their responsibilities with respect to their review and approval of the consolidated financial statements of The Corporation of the City of Brockville for the year ended December 31, This report summarizes our significant audit findings arising from the audit and other matters which we believe should be brought to your attention. Canadian generally accepted auditing standards do not require that we design procedures for the purpose of identifying matters to be communicated to Council. Accordingly. this Report is a by-product of the audit and is therefore a derivative communication. The audit would not necessarily identify all matters that may be of interest to the members of Council in fulfilling its responsibilities. REsPoNsIBILITIES Our responsibility is to form and express an opinion on the financial statements that have been prepared by management, with the oversight of the members of Council. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement The preparation of the financial statements, including the accompanying notes, is the responsibility of management. This includes the selecting the significant accounting policies, for applying judgment in preparing accounting estimates and for the preparation of the financial statements in accordance with Canadian generally accepted accounting principles. Council is responsible for oversight of management with regards to the preparation of financial statements. An audit of the financial statements does not relieve management or Council of their responsibilities. PLANNING An overview of the planned scope and timing of the audit, as well as a discussion of audit risk and materiality was previously communicated to you in correspondence dated February 10, 2012 INDEPENDENCE We confirm that we are not aware of any relationship or non-audit services that would impair our independence for purposes of expressing an opinion on the financial statements. Bennett Lewis McMahon Stillar Page 2

47 SIGN/FlCA N TA UDI T FINDINGS SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES Significant accounting principles and policies are disclosed in the notes to the financial statements. Within the context of the audit, management has represented to us that there have not been any material changes in the accounting principles and policies during the year. We have not noted any changes and have not recommended any changes for the current reporting period. During 2011 (as in 2010) the construction costs for the Aquitarium (formerly the Maritime Discovery Centre) were included in expenses. We examined the funding and other agreements with respect to the Aquitarium and, based on the terms of the agreements, concluded that the costs dont meet the definition of tangible capital assets in the public sector accounting standards. ACCOUNTING ESTIMATES Management has the responsibility for applying judgment in preparing the accounting estimates and disclosures contained within the financial statements. Significant judgments and estimates were as follows: Accrual for employee future benefits of $5,787,000 Solid waste landfill liabilities of $3,520,000 Amortization of tangible capital assets Subject to your consideration, we accept management s conclusions as to these estimates. In addition to the current year estimates, many of the cost figures for tangible capital assets are based on estimates, as described in the accounting policy note to the consolidated financial statements. MISSTATEMENTS AND SIGNIFICANT AUDIT ADJUSTMENTS Misstatements represent audit findings for which we do not agree with the amount, classification, presentation or disclosure of items in the financial statements. In conducting our procedures, we may identify misstatements that require adjustments to the recorded amounts. These audit adjustments are discussed with management, who in consultation with us, determine if an adjustment should be recorded. Significant adjustment that were recorded as a result of our audit findings include the accrual of $225,000 of grant revenue related to the construction of a tangible capital asset and the accrual of $100,000 of costs related to a capital project. Neither of those adjustment affected operating surplus Bennett Lewis McMahon Stillar Page 3

48 The unadjusted misstatements that we detected during the audit would result in a $42,000 decrease in the excess of revenue over expense for the year. The effect of uncorrected misstatements related to prior periods would result in a $55,000 increase in the excess of revenue over expense. Those adjustments are summarized in the attachment to this report. The impact on the operating surplus as at December 3 1, 2011 is au increase of $3,000. Subject to the consideration of Council, we are willing to accept management s opinion that the unrecorded misstatements, individually and in aggregate, are not significant to the financial statements. Canadian generally accepted auditing standards require that we request that uncorrected misstatements be corrected. Difficulties We did not encounter any serious difficulties in the performance of the audit. We received the full cooperation of management and employees of the Corporation and, to our knowledge, had complete access to the accounting records and other documents that we needed in order to carry out our audit. We have had no disagreements with management, and have resolved all auditing, accounting and presentation issues to our satisfaction. CONTROL DEFICIENCIES The responsibility for the design and maintenance of an appropriate system of internal controls to provide reasonable assurance that the accounting systems provide timely, accurate and reliable financial information and to safeguard the Corporation s assets, is part of management s overall responsibility for the day-to-day operations of the Corporation. We obtain a sufficient understanding of internal controls that are relevant to the preparation of the financial statements to design audit procedures that are appropriate in the circumstances. We only evaluate, and test, those internal controls on which we plan to rely during our audit. Our audit is not designed to allow us to provide an opinion on the systems of internal controls, nor should it be expected to. No major control issues were noted during the course of the audit. OTHER MATTERS We are not aware of any other matters that require the attention of Council before you approve the financial statements. Bennett Lewis McMahon Stillar Page 4

49 Current Accounting and Reporting Developments New developments in accounting standards There are three new accounting standards for governments that have been put in place, that require implementation in They deal with foreign currency and complex financial instruments, such as derivatives and would have limited impact on your financial statements, if they were to be applied at this time. We will continue to keep management informed of these standards as the implementation time approaches or in the event that you enter into more complex financial instrument contracts. There are a number of projects currently in progress by The Public Sector Accounting Board that may have implications to future financial reporting. They include projects that address, environmental cleanup and tax revenues. We will continue to keep you updated regarding the progress of these studies. //L S Chartered Accountants, Licensed Professional Accountants Brockville, Canada August 22, 2012 Bennett Lewis McMahon Stillar Page 5

50 Corporation of the City of Brockville Summary of Uncorrected Financial Statement Misstatements December 31, 2011 Effect on Financial Position Effect on Statement of Operations Individual misstatements greater than $20,000 Unrecorded accrued liability (Brockvillle Centre Devlopment Invoice) Summary of other misstatements Unrecorded bank deposits Estimated overstatement of grant revenue RinC program regarding Youth Arena Estimated understatement of allowance for doubtful accounts (40,208) 40,208 (40,208) 40,208 8,251 (8,251) (5,345) 5,345 (5235) 5,235 (2,329) 2,329 Affect of prior year carry forward misstatements, impacting operating deficit Affect of prior year cariy forward misstatements, impacting revenue of capital projects Aggregate of uncorrected misstatements Impact of above on operating deficit Impact of above on revenue for capital projects (9,099) 64,550 (42,537) 97,988 As of end of 2011 during ,016 (12,115) (45,553) 110,103 Audit Materiality 500,000